The current market for high-quality fresh-baked gluten-free
dairy-free
desserts is not yet large enough to sustain a
medium-sized baking facility
in New York
City.

A little elaboration. When Happy Happy Happy opened its bakery in Manhattan
its facility was envisioned as only the first step of a business plan for
a much larger baking operation. The idea was to establish a presence in the
gluten-free, lactose intolerant, and vegan/vegetarian communities and then
expand operations to accommodate a greater volume of business. And for the
last 15 months the plan worked well. Business increased as visibility of
our brand grew. Word of mouth and response to our products was uniformly
positive. And most importantly to us we were creating great tasting all-natural
products that were absolutely gluten-free, dairy/lactose/casein-free, yeast-free,
peanut-free and free of trans fats, hydrogenated fat, colorings, dyes, extracts,
preservatives, guar/xanthan gums, and artificial additives.

By January 2006 we had exceeded the capacity of our small bakery. The time
had come to expand into a bigger space and hire more personnel. We had willing
investors and the money was there. However, it had become apparent via research
and empirical knowledge that the market was not. The volume of customers
in the New York area necessary to support a larger gluten-free dairy-free
baking facility for our fresh-baked products was not yet present. We explored
many ideas that would allow us to reach greater numbers of people and find
a solution to this problem. We rejected them because these solutions would
have either compromised the taste of our products, added prohibitively to
their manufacturing cost (already much higher than our competitors, ingredients
such as Belgian cocoa and Tahitian vanilla beans being quite expensive),
or would have contradicted our baking philosophy by adding chemicals, ingredients,
or preservatives we would not abide. As such rather than invest hundreds
of thousands of dollars on personnel and on a facility that in the long term
would lose money, we made the very difficult decision to close Happy Happy
Happy.

Two additional observations:

There is a perception among some in the gluten-free community that there
is tremendous growth in the diagnosed celiac population. Although there
is growth, it is incremental not exponential. And although there is an
estimated
2 million undiagnosed celiacs who might benefit from gluten-free products
they are indeed undiagnosed and can not be counted on as consumers of
these products.

Many of the current potential customers for gluten-free dairy-free
baked goods are themselves bakers. As such they are less prone to
make the effort
to obtain baked goods like the ones created by Happy Happy Happy – those
that are fresh baked and best enjoyed within a couple of days of
being made.

Will Happy Happy Happy ever return? Perhaps. We will watch the market
carefully and should we ever come to the conclusion that the customer
base for our fresh-baked
high-quality gluten-free dairy-free products has grown to a viable
point for our business, we will build that larger baking facility
we had originally
planned.